Sociedad Química y Minera de Chile Reports 1Q:19 Earnings

(SQM,
23.May.2019) — Sociedad Química y Minera de Chile S.A. reported earnings today
for the three months ended March 31, 2019 of US$80.5 million (US$0.31 per
share), a decrease from US$113.8 million (US$0.43 per share) reported for the
three months ended March 31, 2018. Gross profit reached US$145.5 million (29.9%
of revenues) for the three months ended March 31, 2019, compared to US$192.7
million (37.1% of revenues) recorded for the three months ended March 31, 2018.
Revenues totaled US$504.2 million for the three months ended March 31, 2019,
representing a slight decrease of 2.8% compared to US$518.7 reported for the
three months ended March 31, 2018.

SQM’s
Chief Executive Officer, Ricardo Ramos, stated: “We reported earnings for
the three months ended March 31, 2019 of US$80.5 million. In line with our
expectations, iodine and potassium chloride prices increased significantly
compared to the same period last year, and sales volumes grew in the iodine,
specialty plant nutrition and lithium business lines. In fact, we reported the
highest quarterly iodine revenue since 2013. Other important factors that
impacted our results in the first quarter 2019 were lower margins in the
lithium business line. These margins were impacted by lower average prices and
higher costs related to the new lease payment structure with Corfo, which
became effective on April 10, 2018, and were therefore not a part of the first
quarter 2018 costs. Additionally, we sold lower sales volumes in industrial
chemicals during the first quarter 2019 when compared to 2018; we expect
similar sales volumes of solar salts this year as we sold last year,
approximately 45,000 -50,000 metric tons During the remainder of 2019, our
expectations related to sales volumes across all of our business lines have not
changed.”

He
continued by saying, “As expected, during the first quarter, the lithium
market saw price pressure as new supply entered the market. Consequently, our
average prices fell approximately 8% in comparison to the fourth quarter last
year, and we reported average prices of approximately US$14,600/metric tons in
this business line. Our sales volumes were higher than sales volumes reported
in the first quarter 2019, and we continue to expect to sell between
45,000-50,000 metric tons of lithium carbonate equivalent this year.”

Mr.
Ramos continued, “Lithium carbonate and lithium hydroxide demand is
expected to continue to grow at double-digit rates in the future; accordingly,
significantly more supply of both products will be needed. We believe the
lithium demand could grow approximately 17% in 2019 when compared to 2018,
reaching at least 315,000 metric tons. The evolving EV battery technology in
the lithium market will require us to be flexible, and we believe this
operational flexibility is essential, and is the key component of our strategy.
We are currently working on our lithium carbonate expansion to produce 120,000
metric tons per year. We believe this expansion will be completed during the
second half of 2021, with a capex of approximately US$280 million. We are also
expanding our lithium hydroxide capacity in Chile to 29,500 metric tons in
2021; the expected capex for this project is US$100 million. Finally,
Wesfarmers formally informed that it is expecting to acquire Kidman Resources,
our partner in the Mt. Holland lithium project; we believe their experience and
capabilities related to chemical processing, and their significant local
infrastructure in Australia will be an important asset in the development of
the project.”

He
closed by saying, “I would like to highlight that during the first part of
2019, board elections were held. We look forward to working with the new Board
members, and believe that they will bring good insights and expertise to the
Company at the Board level.”